Type 1 diabetes (T1D) is an autoimmune disease that usually presents during the first 2 decades of life in which the pancreatic beta cells are destroyed by an aberrant immune response. Patients usually do not present with clinical disease until after the body's immune system has destroyed 90% or more of the total insulin-producing beta cell mass of the endocrine pancreas. The lack of beta cells leads to hyperglycemia, the major cause of the many devastating complications that sharply increases morbidity and mortality. Over the past several years, many advances have been made in replacing the beta cell mass through pancreatic transplantation or islet implantation. Unfortunately, these interventions continue to be limited by a general chronic shortage of donor pancreas. One means to circumvent this shortage that has drawn serious attention in recent years is the possibility of generating mature functional islets from stem/progenitor cells isolated from a variety of sources, including the pancreas itself. Challenges in bringing this stem cell-based technology and therapy to a commercially viable product include sufficient expansion of stem/progenitor cells and the ability to force differentiation of the expanded cells to islet-like clusters. In this SBIR Phase I grant, studies are proposed to examine the ability to differentiate human pancreas-derived stem/progenitor cells that have been expanded in culture for more than 2-3 years into functional islet-like clusters. Differentiation protocols will be used that have proven successful for the differentiation of long-term cultured mouse pancreas-derived stem/progenitor cells. Differentiation will be followed by identifying changes in gene expressions known to occur during endocrine pancreas development. Functional activity of the in vitro- differentiated islet-like clusters will be assessed by their ability to reverse hyperglycemia in a regulated fashion following implantation into streptozotocin (STZ)-induced diabetic mice. It is estimated that over 1 million individuals in the USA suffer from T1D with an additional 10,000-15,000 new cases diagnosed each year. Treatment of T1D and its complications cost the USA health care system more than $100 billion dollars and reduces the life-span of T1D patients by one-third. The chance that stem cells may offer a new modality to generate islets for implantation represents a new and novel approach to relieve the shortage of islets and pancreata for transplantation, the most promising "cure" for this disease.